From: Samart Srijumnong <ssg9328@uxa.cso.uiuc.edu>

[...]

To me, the word [Khun] could be used in both informal and formal discourse.
The term itself does not serve as a device to hint any gesture of attitude, 
positive or negative about the person addressed to, either. 

I used this honorific with you for at least one reason. I have not yet known
you in details. I don't know if you are older or younger than me. I don't 
know you social status, nor your education. I don't know what kind of job
you have and in what position. All these unknown conditions about you makes
it easy for me to use the honorific term. It is safe for me as a speaker.

If I am having a direct conversation with someone who I have known for some
time, e.g. Khun Tawit, I would not address him as Khun either. Now I am
using Khun with his name as a third person referring to by this very 
discussion. It also depends. If this discussion is of an academic one, I would
not need to have any honorific for him. I could simply go ahead referring to
him by just his name (first and last in Thai materials). 

The term Khun is originally a title given to anyone by the court. The person
with Khun title will be entitled to hoard land up to a certain rai (500?)
Later this usage has changed. It is now given to single woman who
is entitled by the court as in the level equivalent to that of Khun Ying+
(probably equivalent as that of Lady of the English Court) except that
Khun Ying+ is used with a woman who is married.

Khun is used with anybody but if the person is known to have other kind of
title, e.g. aa-jaan (a teacher), mOO+ (a doctor), aa-sia' (an affluent 
and powerful ethnic Chinese merchant), muad' (a police or military man of
captain level), such title could be used instead to show a bit specific
reference to the person. 

Many Thais like to use sibling term to call others, e.g. Phii (older brother
or sister). Strangely enough, however, nOOng^ (younger brother or sister) is
not often used except in the North, it is used with a waiter (or waitress).
When the context of kinship arises, to use Khun as an honorific seems to
give a hint that the speaker likes to keep distance between him and the 
intended hearer. I remember my sister, who normally called her husband
with phrase like phOO"ai"tung+ (father of Tung, their son), used Khun when
they began some fight. Hence, using Khun does not always suggests close 
relationship.

Please note that the above description is of my own interpretation. I have
not consulted any linguistic authority which might suggest different 
connotations for the word. Nonetheless, I believe my usage of the term
more or less shares with other Thais. I may be wrong. Anyone?